Ukraine plans to mirror Western sanctions on Russia

Within a few days Ukraine plans to impose measures against Russian companies working within its borders. The sanctions will affect the financial, energy and military sectors similar to those already imposed by the US and EU.

The Ukrainian State
Fiscal Service has listed up to 1,000 entities with over 50
percent Russian capital, Kommersant cites a person in the
Ukrainian government. However the sanctions will be imposed on
only a part of the list, mostly those companies related to
Russian state enterprises.

Experts suggest the measures have more of a political message and
will barely affect the Russian companies in Ukraine.

“There is no reason to expect the scale effect of sanctions,
but Ukrainian businessmen will be forced to search for new
markets and to reconfigure business structures so they are not
connected with Russia,” Kommersant quotes Andrey Novak, the
head of the Committee of Economists of Ukraine.

The first sanctions pack which is already informally approved by
the Ukrainian government is similar to the measures put in place
by the US and EU.

The sanctions will prohibit issuing the companies loans longer
than 90 days. Additionally Ukraine will impose an embargo on the
import and export of arms and related material to and from
Russia. Also, the export of certain energy-related equipment and
technology to Russia will be prohibited.

The second pack of sanctions, which is still under consideration
may restrict Russian companies from participating in
privatization tenders as well as prohibit Russian gas companies
in the Ukrainian market.

The supply of oil and gas pipes, pumps and compressor equipment
is insignificant and may be substituted by Russian versions,
according to Kommersant citing people familiar with the oil and
gas sector.

Lukoil and Rosneft, the major Russian players in the Ukrainian
oil products market, declined to comment on the possible impact
of sanctions. However, last week Lukoil agreed to sell all of its 240 gas stations in Ukraine
to the Austrian AMIC Energy Management GmbH.

The subsidiaries of Russia’s state banks, such as Sberbank, VTB
and Vnesheconombank, have a 12 percent share of the Ukrainian
banking sector. The banks declined to comment on the possible
impact of sanctions, but people familiar with the industry say
the restrictions won’t affect business as the majority of the
capital for the subsidiaries is within the Russian parent
companies.